A Primer on the Arms Trade

Among the many consequences of the recent Persian Gulf War was a heightened interest in the international trade in armaments, with some analysts forecasting a substantial increase. This article surveys the arms trade, focusing chiefly on the economic features. The survey finds that national prosperity is not connected to a high ratio of arms exports to total output. Nor does poverty stop a nation from spending a relatively large share of its total income on arms from abroad.

In recent years two-thirds of all arms exports have come from the United States and the Soviet Union. However, the competition for influence between NATO and the Warsaw Pact seldom resulted in significant arms transfers from both alliances to the same country. A number of multilateral efforts have been undertaken to control the arms trade. U.S. controls have operated to forfeit arms sales by U.S. firms to foreign competitors, but a drastic reduction in authorized U.S. arms exports would not have a dramatic impact on the U.S. economy.